Transocean Partners (NYSE: RIGP) and Precision Drilling (NYSE:PDS) are both small-cap energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.
This table compares Transocean Partners and Precision Drilling’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Transocean Partners pays an annual dividend of $1.45 per share and has a dividend yield of 8.1%. Precision Drilling does not pay a dividend. Transocean Partners pays out 60.2% of its earnings in the form of a dividend. Transocean Partners has raised its dividend for 3 consecutive years.
Earnings and Valuation
This table compares Transocean Partners and Precision Drilling’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Precision Drilling||$1.04 billion||0.81||-$101.85 million||($0.35)||-8.20|
Transocean Partners has higher earnings, but lower revenue than Precision Drilling. Precision Drilling is trading at a lower price-to-earnings ratio than Transocean Partners, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
29.0% of Transocean Partners shares are held by institutional investors. Comparatively, 44.7% of Precision Drilling shares are held by institutional investors. 0.1% of Transocean Partners shares are held by company insiders. Comparatively, 1.0% of Precision Drilling shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This is a breakdown of current ratings and target prices for Transocean Partners and Precision Drilling, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Precision Drilling has a consensus price target of $4.49, suggesting a potential upside of 56.30%. Given Precision Drilling’s higher possible upside, analysts clearly believe Precision Drilling is more favorable than Transocean Partners.
About Transocean Partners
Transocean Partners LLC a limited liability company. The Company is formed by Transocean Partners Holdings Limited and a subsidiary of Transocean Ltd. (Transocean), to own, operate and acquire advanced offshore drilling rigs. The Company’s assets consist of over 50% ownership interest in each of the entities that owns and operates over three ultra-deepwater drilling rigs that are operating in the U.S. Gulf of Mexico, which include Discoverer Clear Leader, Discoverer Inspiration and Development Driller III. The Company owns or has partial ownership interests in, and operated over 60 mobile offshore drilling units, including approximately 30 ultra-deepwater floaters, over seven harsh environment floaters, approximately five deepwater floaters, over 10 midwater floaters and approximately 10 high-specification jackups. Transocean also has approximately six ultra-deepwater drillships and over five high-specification jackups under construction.
About Precision Drilling
Precision Drilling Corporation (Precision) is an oilfield services company. The Company provides onshore drilling and completion and production services to exploration and production companies in the oil and natural gas industry. The Company operates through two segments: Contract Drilling Services, and Completion and Production Services. The Contract Drilling Services segment operates its rigs in Canada, the United States and internationally. The Completion and Production Services segment provides completion and workover services and ancillary services to oil and natural gas exploration and production companies in Canada and the United States. As of December 31, 2016, the Contract Drilling Services segment consisted of 255 land drilling rigs, including 135 in Canada, 103 in the United States, five in Mexico, four in Saudi Arabia, five in Kuwait, two in the Kurdistan region of Iraq and one in the country of Georgia.
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